Resort Lease to On-Premises Business

Resorts lease space to business like gift shops, restaurants, and, as is the case here, a tennis shop with permitted use of the tennis courts, It is complicated because this resort is owned and managed by a homeowner's association and subject to a Master Deed, If you have a complicated commercial lease to draft, please start here.

HHB&T Convention Center, Inc.

Commercial Lease Agreement

This Commercial Lease Agreement (“Agreement” or “Lease”) is entered into on this day of 20 , by and between the HHB&T Convention Center, Inc. (“CVC”) at 40 Folly Field Road, Hilton Head Island, South Carolina 29928, and Clint Van Aswegen of 27 Victoria Square Drive, Hilton Head Island, South Carolina 29926 and Richard Eric Wammock of 55 Marshland Road, Hilton Head Island, South Carolina 29926, principals of Hilton Head Island Tennis (“HHIT”)

Recitals

WHEREAS, the CVC is a South Carolina Corporation owned by the three homeowner regimes of the Hilton Head Island Beach and Tennis Resort (“Resort”), which are Ocean Villas Owners Association, Inc. of Hilton Head, Admirals Row Owners Association, Inc., and Tennis Villas Owners Association, Inc.,

WHEREAS, the CVC desires to enter into an agreement for the purpose of leasing the tennis facilities at of Hilton Head Island Beach and Tennis Resort (“Resort”) to accomplished tennis professionals who will use their best efforts to provide a comprehensive tennis program to Resort homeowners, their guests, and renters, that offers an enjoyable and active tennis experience provided by a friendly, attentive, and knowledgeable staff.

WHEREAS, HHIT possesses professional tennis knowledge and has experience in all phases associated with tennis instruction and the administration of tennis programs, and desires to lease a tennis facility to conduct a comprehensive tennis program.

NOW, THEREFORE, in consideration of the foregoing recitals, and subject to the conditions and covenants set forth herein, the parties agree as follows:

  1. BASIC AGREEMENT PROVISIONS. Each provision contained in this section is subject to the additional terms and restrictions set forth in following sections of this Agreement.

1.1. Landlord: HHB&T Convention Center, Inc.

1.2. Landlord’s Mailing Address: Attn: Executive Director

40 Folly Field Road

Hilton Head Island, SC 29928

with a copy to:

Terry Finger, Esquire

Finger, Fraser, & Andrews, PA

35 Hospital Ctr. Commons, Ste. 200

P.O. Box 24005

Hilton Head, SC 29925

1.3. Landlord’s Phone Number: 800-475-2631

Landlord’s Facsimile Number: 843-842-3323

1.4. Tenant: Clint Van Aswegen

Richard Eric Wammock

1.5. Tenant’s Mailing Addresses: Clint Van Aswegen

27 Victoria Square Drive

Hilton Head Island, SC29926

Richard Eric Wammock

55 Marshland Road

Hilton Head Island, SC 29926

1.6. Tenant’s Trade Name: Hilton Head Island Tennis

1.7. Tenant’s Phone Number:

Tenant’s Facsimile Number:

1.8. Premises Address: 40 Folly Field Road

Hilton Head Island, SC 29928

1.9. Premises: The Resort’s Tennis Facility, which

includes Tennis Courts 3 through 10, and the Pro Shop located within the Maintenance Building on the Resort grounds.

1.10. Initial Term: One Year, subject to Spring Break

1.11. Commencement Date: January 1, 2010

1.12. Anticipated Delivery Date: January 1, 2010

1.13. Minimum Rent Start Date: January 1, 2010

1.14. Minimum Rent: Annual Monthly

Jan. 01, 2010 – Dec. 31, 2010

$13,200.00

$1,200.00

Jan. 01, 2011 – Dec. 31, 2011[*]

$16,500.00

$1,500.00

Jan. 01, 2012 – Dec. 31, 2012

$16,500.00

$1,500.00

1.15. Security Deposit $1,200.00

1.16. Required Business Hours: Tenant shall conduct its business in

good faith during the hours of 8:00 a.m. to 5:00 p.m. seven days a week except during Spring Break Tennis, or such other days, nights and hours as Landlord, in its sole discretion, shall determine from time to time and at no other time subject to specific exceptions for the following holidays: Easter Sunday, Thanksgiving Thursday, Christmas Day and New Year’s Day.

1.17. Permitted Use: Comprehensive Tennis Program

1.18. Guarantors: Clint Van Aswegen and Richard Eric

Wammock, both jointly and severally

1.19. Options to Renew: Provided Tenant is and has not been

in default, Landlord agrees to grant Tenant one Option to renew this Lease for a two year period. Tenant must provide Landlord with written notice of its intent to renew at least 90 days prior to the expiration of the term.

1.20. Exhibits: A. Spring Break Contract

B. Rules and Regulations

  1. MINIMUM RENT AND RENT PAYMENT

2.1 Minimum Rent. Tenant shall pay Minimum Rent in monthly installments, except for the month of March because of Spring Break, payable on the first day of each calendar month, in the amount set forth in Section 1.14. Should the Term begin or end on other than the first or last day of a calendar month, the amount of Minimum Rent for the first partial month shall be prorated. Tenant shall pay Minimum Rent for the first full calendar month (and for any initial partial month) and the Security Deposit upon execution of this Lease. Minimum Rent shall increase as set forth in Section 1.14.

2.1 Payment of Rent. Tenant shall pay all Rent to Landlord at the Rent Payment Address specified in Section 1.2, or at such other address as Landlord may designate from time to time. Minimum Rent and Additional Rent shall not be withheld for any reason, and they are not subject to prior notice, demand, deduction, or offset. Without prejudice to Landlord’s rights to declare Tenant in default for failure to make timely payment, Landlord may, at its option, accept Rent after the due date. No payment by Tenant or receipt by Landlord of a lesser amount than any installment or payment of Rent due shall be deemed to be other than on account of the amount due, and no endorsement or statement on any check or payment of Rent shall be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such installment or payment of Rent, or pursue any other remedies available to Landlord. The acceptance of Rent by Landlord at any time shall not constitute a waiver of any right of Landlord.

2.2 Late Payment Charge. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, personnel costs, and late charges that may be imposed on Landlord by the terms of any mortgage or trust deed covering the Center. A payment by Tenant of a five (5%) percent late charge shall be due as Additional Rent for any Rent not paid within five (5) days after the same is due. Landlord and Tenant hereby agree that such late charge represents a fair and reasonable estimate of the cost Landlord shall incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue amount, nor prevent Landlord from exercising any other rights and remedies. Notwithstanding the foregoing, should any payment of Rent by check be rejected for insufficient funds, Landlord shall have the right, upon notice to Tenant, to require that all future payments by Tenant under this Lease be made by cashier’s check acceptable to Landlord.

  1. Additional Rent. Tenant agrees to pay Landlord additional rent in an amount equal to 50% of the net profits it generates from special events by HHIT at the premises. Additional rent will be due and payable thirty days after completion of the event. Special events include, but are not limited to, round robins, tournaments, and mixers. For the purposes of this section, Special Events do not include Tennis Academy activities. Tenant further agrees to pay Landlord 10% of the sales price of any HHIT tennis programs advertised on the Resort’s web site that is booked through the web site or the Front Desk[W1].
  1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises upon the terms, covenants, and, conditions set forth in this Agreement. By entering into any occupancy of the Premises, Tenant, shall be deemed to acknowledge that it has inspected the Premises and that the Premises are in good order and repair with any Landlord’s Work substantially completed. Tenant further agrees that the Premises are being leased in their "as is" condition, unless otherwise specified.
  1. TERM AND DELIVERY OF PREMISES. The initial term of the Agreement ("Initial Term") is the period set forth in Section 1.11, plus any initial partial calendar month, commencing on the Commencement Date (as defined in Section 1.12). Tenant and Landlord acknowledge and agree that the Commencement Date may change due to Landlord’s construction delay, or Unavoidable Delays, and that Landlord shall not be subject to any liability as a result of any such delay. If Landlord fails for any reason to deliver possession of the Premises to Tenant by the Anticipated Delivery Date as set forth in Section 1.13, (i) Landlord shall not be liable to Tenant for any direct or consequential losses resulting to Tenant from the delay, (ii) this Agreement shall not terminate, and (iii) the Commencement Date shall be extended as appropriate to take into account when Landlord actually delivers possession of the Premises to Tenant. If Landlord is unable to deliver possession to Tenant by the date one hundred twenty (120) days after the Anticipated Delivery Date, Landlord or Tenant, at its election, may terminate this Lease without further liability.
  1. SPRING BREAK. For the purposes of this Agreement, the term “Spring Break” means the period during which the tenant must relinquish possession of the Premises for Spring Break Tennis, a program ran by a separate entity that utilizes the Resort’s Tennis Facility during Spring Break. The specific dates of Spring Break shall be determined as set forth in the CVC’s contact with Spring Brake Tennis. Attachment A. The parties expressly agree that they are not incorporating the terms of the Spring Break Contract into this Agreement, and that the Spring Break Contract is merely a guide to determine the specific dates of Spring Break.
  1. OPERATION OF TENANT’S BUSINESS.

7.1 Use. The Premises shall be used only for the Permitted Use set forth in this Agreement and for no other purpose. Tenant shall conduct its business at the Premises only under the Tenant’s Trade Name set forth in Section 1.8 or under such other trade name as Landlord may approve in writing. This Agreement does not contain any restrictive covenants or exclusive use provisions, express, or implied, in favor of Tenant. Tenant agrees that by entering into this Agreement, it will not offend or be in breach of any restriction by which it is bound under any other lease or agreement to any other person. Violation of any of the provisions of this Section shall, at Landlord’s option, be an Event of Default.

7.2 Tenant’s Operations. Tenant shall open for business by the Minimum Rent Start Date and thereafter continuously and actively operate its business at the Premises with due diligence and efficiency throughout the Term and any renewal or extension thereof. Tenant shall at all times keep and maintain within the Premises an adequate number of trained and qualified employees and an adequate stock of current-season merchandise and trade fixtures of character, quality, and quantity reasonably designed to service and supply the usual and ordinary demands of Tenant’s customers, and Tenant shall at all times utilize Tenant’s best efforts to transact the highest volume of business and sales from the Premises, and to increase Court and Resort Villa rentals. All Tenant’s employees must wear appropriate shirts and nametags identifying themselves as employees of HHIT, as the Executive Director of the CVC shall deem appropriate.

7.3 Specific Use Terms. Tenant shall provide a year-round comprehensive and professional tennis program, and offer services and productions related to this program and the program’s association with the Resort. As part of business operations, Tenant shall:

  1. Provide competent tennis instruction for all groups and levels of players by United States Professional Tennis Association (“USPTA”) certified professionals;
  2. Supervise all tennis play, and oversee the standards of play and etiquette on the tennis courts cautioning staff and players about the use of Profanity and Unsportsmanlike like conduct;
  3. Enforce all Resort rules and regulations governing the use of the fa­cility, its equipment, and other property;
  4. Operate and maintain a reputable pro shop staffed with competent personnel and featuring quality merchandise and services;
  5. Devote a reasonable number of hours to playing tennis with Resort Owners regardless of their tennis excellence; such play is not to be considered a playing lesson;
  6. Enthusiastically encourage tennis participation by planning events to promote the sport and fellowship in the Resort, and prepare tennis clinics, films, fun playing events, or tennis education programs for such activities;
  7. Have the leased Tennis Courts available for business seven (7) days a week from the second week of April through the third week of February from 8:00 AM until 5:00 PM daily, or as necessary for tournaments, night play, and special events. Daily hours shall only be adjusted by mutual written agreement between the Executive Director and HHIT;
  8. Ensure the tennis courts are available for Owner use when Tenant is not open for business during the hours of 5 p.m. to 10 p.m.;
  9. Actively solicit off-Island small group instruction/play business, especially USPTA league teams Activities, and programs shall be governed by the rules and practices of the Resort;
  10. Actively solicit lodging business for the Resort’s On Premise Rental Program;
  11. Promote on-going events and create, promote, and manage new activities aimed at increasing Court and Villa rentals[W2] including Spring Break Tennis;
  12. Provide a printed flyer of tennis activities available within scheduled hours and in sufficient quantity to distribute through the Pro Shop, Sales Department, Front Desk, and the Security Guard Gate and pay all costs in connection with this covenant; and
  13. Publish tennis activity news that is directly mailed to Resort Villa Owners in cooperation with regime management, which can be done through timely articles in “Beach Briefs” newsletter; and
  14. Not directly solicit Resort owners or their guests.

7.4 Hours of Operation. Tenant shall keep the Premises open for business to the public and cause such business to be conducted during the Required Business Hours set forth herein, as the parties may periodically amend by written agreement. Tenant shall not reduce its business days and hours beyond those business days and hours established by Landlord without Landlord’s prior consent. To the extent that Landlord incurs additional costs and expenses as a result of Tenant’s extended days and hours of operation, Tenant shall promptly reimburse Landlord upon demand for such additional costs and expenses.

7.5 Maintenance. Maintain the tennis courts in a professional manner. At the end of each day, the courts shall be cleared of racquets, balls, ball machines, and clean of all debris. Tenant agrees to immediately notify Landlord of any condition or event that creates a condition of danger or potential injury on the premises so that Landlord may have the opportunity to cure such condition or event.

7.6 Court Use and Availability. Resort owners, their guests, and renters will be offered free tennis and use of the courts based on a reservation process. Tennis Courts 1 and 2 of the newly rebuilt courts will be available for reservation and use at all times by Resort owners, their guests, and renters except during Spring Break, during which time only Court 1 mustbe available. The parties agree that Tenant is to use its best efforts to develop and maintain year-round tennis program and related services and activities for the benefit of the Resort and its owners.

7.7 Violation. Tenant acknowledges that its failure to operate its business at the Premises during the Required Business Hours shall result in Landlord incurring costs, expenses, and damages that are not contemplated by this Lease, by the direct impact of the violation, by the adverse impact such violation shall have on Resort owners, their guests, and renters, and other commercial tenants at the Resort, and/or by diminishing property value because of adverse publicity or appearances by Tenant’s actions. Tenant also acknowledges that the exact amount of such costs, expenses, and damages are extremely difficult to ascertain. Accordingly, for each day that Tenant violates the requirements contained in this Section, if Landlord does not terminate this Lease, Tenant shall pay to Landlord, in addition to Minimum Rent and Additional Rent, immediately on demand the sum of $100.00 as liquidated damages. The parties agree that such amount of liquidated damages represents a fair and reasonable estimate of the costs, expenses, and damages that Landlord shall incur by reason of Tenant violating the provisions of this Section.

7.8 Prohibited Acts. Tenant covenants that neither Tenant nor Tenant’s Agents will (i) place any merchandise, displays, or other articles in any entry to the Resort or Premises, or in any area outside of the Premises; (ii) erect or maintain any barricade or scaffolding which may obscure the signs, entrances or show window of any other Tenant in the Resort or tend to interfere with any such other Tenant’s business; (iii) create or maintain, or allow others to create or maintain, any nuisances, including without limitation, loud noises, sound effects, other objectionable advertising media (including, loud speakers, phonographs, public address system, sound amplifiers, televisions, or radios audible outside the Premises), offensive odors and smoke or dust in or about the Premises; (iv) place or maintain any signs or distribute handbills in any parking area; (v) commit any waste; (vi) maintain or allow to be maintained any excessively bright lights, or changing, flashing, flickering or lighting or similar devices, the effect of which will be visible from the exterior of the Premises; or (vii) conduct or permit any activity, practice, sales, or use in violation of any applicable law.

7.9 Rules and Regulations. During the Term of this Agreement, Tenant’s use of the Premises shall be subject to the Rules and Regulations of the Resort as set forth in Exhibit B. Landlord may amend the Resort’s Rules and Regulations from time to time, and shall notify Tenant of any such amendments. Tenant shall comply with any modified Rules and Regulations upon notice to Tenant from Landlord.

7.10 Signage. No sign shall be placed in or about the Premises that states any financial difficulty, such as liquidation, need for cash, or going out of business. Tenant is required to install Landlord approved signs on the Tenant’s sign bands that identify the Tenant’s Trade Name within 90 days from the Commencement Date. Tenant may erect, but only with Landlord’s prior written approval such other signage as it allowable under the applicable laws. Landlord, in connection with such signage approval, shall have the right to determine the size, shape, type, color, lighting, location, and style of all lettering and/or logos in connection with such signage. In addition, Landlord shall have the right to limit any use by Tenant of any windows, and areas of the Premises visible outside the Premises, for signage, advertising, or other materials intended to attract attention to the Premises. Landlord may from time to time inaugurate or modify a uniform signage policy for all tenants, with which Tenant agrees to comply. Tenant may use professionally made and content appropriate banners for advertising special events; Tenant shall not display any banners beyond the timing of the event it advertises, and Tenant shall promptly remove such banners at the completion of the advertised event.

  1. SECURITY DEPOSIT. Tenant has deposited with Landlord the amount set forth in Section 1.15 (the "Security Deposit") as security for the full and faithful performance of each term, provision, covenant, and condition of this Lease. At Landlord’s request, Tenant shall from time to time increase the Security Deposit commensurate with any increase in Minimum Rent. If Tenant defaults in respect of any of its obligations under this Lease, including, but not limited to, payment of Rent, Landlord may use, apply or retain all or part of the Security Deposit for the payment of any Rent in default or for any other sum that Landlord may spend or be required to spend by reason of Tenant’s default. Within 10 days of demand Tenant shall repay to Landlord the amount of the Security Deposit so used. Tenant’s failure to do so shall, at Landlord’s election, constitute an Event of Default by Tenant. Tenant shall not assign, transfer, or encumber the Security Deposit, and any attempt to do so shall not be binding upon Landlord. Landlord shall not be required to keep the Security Deposit separate from its general funds, and no trust relationship is created with respect to the Security Deposit. If Landlord sells, ground leases or assigns the Center or a portion of the Center containing the Premises, or otherwise terminates its interest in this Lease, then Landlord may assign the Security Deposit to its purchaser, ground landlord, successor, or assignee without further liability to Tenant. Should Tenant faithfully and fully comply with all of the terms, provisions, covenants, and conditions of this Lease, the Security Deposit or any balance thereof shall be returned to Tenant, or at the option of Landlord, to the last assignee of Tenant’s interest in this Lease at the expiration of the Term. Tenant shall not be entitled to any interest on the Security Deposit.
  1. INDEMNITY AND INSURANCE.

9.1 Indemnification. Tenant agrees to defend (with attorneys acceptable to Landlord), protect, indemnify, and hold harmless Landlord and Landlord’s Agents from any and all claims, liabilities, demands, causes of action, attorney’s fees, damages, judgments, and expenses of any nature arising from or related to (a) the conduct or management of the Premises or of any business therein, or any work or thing whatsoever done, or any condition created in or about the Premises during the Term; (b) any act, omission, or negligence of Tenant or any of Tenant’s Agents; (c) any accident, injury, or damage whatsoever occurring in or at the Premises; (d) any breach or default by Tenant under this Lease; (e) all damages sustained by Landlord as a result of any holdover by Tenant in the Premises including, but not limited to, any claims by another tenant resulting from a delay by Landlord in delivering possession of the Premises to such tenant; and, (f) any liens or encumbrances arising out of any work performed or materials furnished by or for Tenant, including any work Landlord may have performed or caused to be performed for Tenant for which Tenant has not paid Landlord. In the event Landlord, without fault on Landlord’s part, is made a party to any litigation commenced by or against Tenant, then Tenant shall protect, defend, indemnify, and hold Landlord harmless and shall pay all costs, expenses and attorneys’ fees incurred or paid by Landlord in connection with such litigation. Tenant hereby waives all claims against Landlord for damage to goods, wares, or supplies, or for injury or death to persons in and upon the Premises from any cause whatsoever, except such as result solely from the grossly negligent act or willful misconduct of Landlord.

9.2 Insurance. Tenant shall at all times during the Term, and at its sole expense, obtain and keep in effect the following insurance: (a) commercial general liability insurance through the USPTA in the names of and for the benefit of Tenant, Landlord and the Resort’s three Homeowner Regimes (Admiral’s Row Regime, the Ocean Villas Regime, and Tennis Villas Regime) as additional insureds, and any other parties Landlord designates as additional insureds), with a minimum combined single limit of in the amount of $9,000,000.00; (b) workers’ compensation insurance as required under applicable laws; and (c) such other insurance in such form and amounts as Landlord or Landlord’s mortgagees may require from time to time.

9.3 Deductibles. Any policy of insurance specified to be carried by Tenant pursuant to this Lease that contains a deductible in excess of Five Thousand Dollars ($5,000.00) per occurrence must be approved in writing by Landlord prior to the issuance of such policy. Tenant shall be solely responsible for the payment of any and all such deductibles.

9.4 Increased Coverage. Upon demand, Tenant shall provide Landlord, at Tenant’s expense, with such increased amount of existing insurance, and such other insurance as Landlord or any of its mortgagees may reasonably require.

9.5 Sufficiency of Coverage. Neither Landlord nor any of Landlord’s Agents makes any representation that the types of insurance and limits specified to be carried by Tenant under this Lease are adequate to protect Tenant. If Tenant believes that any such insurance coverage is insufficient, Tenant shall provide, at its own expense, such additional insurance as Tenant deems adequate. Nothing contained herein shall limit Tenant’s liability under this Lease, and Tenant’s liability under any provision of this Lease, including without limitation under any indemnity provision, shall not be limited to the amount of any insurance obtained.

9.6 Insurance Requirements. Any policy of Tenant’s insurance: (i) shall be in a form satisfactory to Landlord and the Mortgagees; (ii) shall be issued by insurance companies licensed and authorized to do business in the State, which are rated "A" or better in Best’s Key Rating Guide and which are determined by Landlord, as financially sound on a current basis; (iii) shall provide that such policies, shall not be subject to material alteration or cancellation except after at least 30 days prior written notice to Landlord and others Landlord may designate; and (iv) shall be primary, and any insurance carried by Landlord or Landlord’s Agents shall be noncontributing. Tenant’s liability insurance shall contain a cross liability endorsement, shall include fire legal liability coverage in the amount of at least One Hundred Thousand Dollars ($100,000.00), and shall include contractual liability coverage specifically insuring performance of Tenant’s indemnification obligations under this Agreement. Tenant’s policy or policies, or duly certified copies of such policies, together with satisfactory evidence of payment of premiums, shall be deposited with Landlord before the Commencement Date, and at least 30 days before each renewal of such policies. If Tenant fails to procure and maintain the insurance required to be procured by Tenant under this Lease, Landlord may, but shall not be required to, order such insurance at Tenant’s expense. All sums reasonably disbursed, deposited or incurred by Landlord in connection therewith, including, but not limited to, all costs, expenses and actual attorneys’ fees, shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

9.7 Waiver of Subrogation. Tenant agrees that any insurance required under this Lease and all other insurance carried by Tenant shall contain a waiver of subrogation by the insurer against Landlord, any Mortgagees, and Landlord’s Agents. Tenant does hereby waive all rights of recovery or causes of action against Landlord, any Mortgagee, and Landlord’s Agents for any damage or loss covered by Tenant’s insurance, or by the type of insurance required by this Lease, or for which Tenant may otherwise be reimbursed. Landlord agrees that any insurance required under this Lease and all other insurance carried by Landlord shall contain a waiver of subrogation by the insurer against Tenant and Tenant’s Agents. Landlord does hereby waive all rights of recovery or causes of action against Tenant and Tenant’s Agents for any damage or loss covered by Landlord’s insurance, or by the type of insurance required by this Lease, or for which Landlord may otherwise be reimbursed.

9.8 Loss or Damage to Tenant’s Property. Landlord shall not be liable for any damage to property of Tenant or of others located on the Premises, nor for the loss of or damage to any of Tenant’s property, or of others by theft or otherwise. Landlord shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain, snow, or leaks from any part of the Premises or from the pipes, appliances, or plumbing works or from any other place or by dampness or by any other cause of whatsoever nature. Landlord shall not be liable for any such damage caused by other tenants or persons, occupants of property adjacent to the Center or the public, or from damage caused by operations in construction of any private, public, or quasi-public work. Landlord shall not be liable for any latent defect in the Premises or in the building of which they form a part. All property of Tenant kept or stored on the Premises shall be so kept or stored at the risk of Tenant only, and Tenant shall hold Landlord harmless from any claim arising out of damage to the same, including subrogation claims by Tenant’s insurance carriers, unless such damage shall be caused solely by the willful act or gross negligence of Landlord.

  1. QUIET ENJOYMENT. Landlord agrees that Tenant, upon keeping and performing the covenants of this Lease, shall at all times during the term of this Lease peaceably and quietly have, hold, and enjoy the Premises subject to the provisions hereof.
  1. NOTICES. Any notice, demand, or communication called for hereunder shall be in writing and delivered to the other party or that party’s designated agent for delivery of such notice by any of the following means: (a) by delivering a copy of the notice to the party; (b) by delivering a copy of the notice to the United States Postal Service for mailing, first-class, postage prepaid, Certificate of Mailing (a Certificate of Mailing is a receipt that provides evidence of the date that the mail is presented to the postal service for mailing); (c) or by delivering a copy of the notice to Federal Express, UPS, or any other nationally recognized overnight courier with the delivery charge prepaid. Such notices shall be delivered or addressed to the Tenant at the Tenant’s mailing address as set forth in Section 1.5 and to the Landlord at the Landlord’s mailing address set forth in Section 1.2, or to such other addresses as either party hereafter designate by written notice to the other. Any such notice, demand, or communication sent shall be deemed given at the time it was personally delivered or at the time it was delivered to the United States Post Office or overnight courier.
  1. ASSIGNMENT AND SUBLETTING.

12.1 Prohibition. Neither this Lease nor any interest in it or the Premises may be assigned, sublet, or mortgaged by Tenant in whole or part, voluntarily or otherwise. Any assignment, mortgage, pledge, hypothecation, subletting, or license of this Lease or the Premises or any portion thereof, either voluntary or involuntarily, whether by operation of law or otherwise without the prior, written consent of Landlord, which shall not be unreasonable withheld, shall be null and void and shall, at Landlord’s election, constitute an Event of Default under this Lease. To the extent not prohibited by provisions of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"), Tenant on behalf of itself, creditors, administrators, and assigns waives the applicability of Sections 541(c) and 365(e) of the Bankruptcy Code unless the proposed assignee of the trustee for the estate of the bankrupt meets Landlord’s standards for consent as set forth below. Landlord has entered into this Lease with Tenant in order to obtain the unique attraction of Tenant’s name and business for the benefit of the Resort; the foregoing prohibition on assignment or subletting are expressly agreed to by Tenant in consideration of such fact. If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, any and all monies or other considerations payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other considerations constituting Landlord’s property under the preceding sentence not paid or delivered to Landlord shall be held in trust for the benefit of Landlord and be promptly paid or delivered to Landlord. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of such assignment. Any such assignee shall upon demand execute and deliver to Landlord an instrument confirming such assumption.

12.2 Landlord’s Consent. In the event Landlord consents to any assignment or subletting, such consent shall not constitute a waiver of any of the restrictions of this Section, which shall apply to each successive assignment of this Lease or subletting of the Premises (or portion of the Premises), if any. In no event shall Landlord’s consent to an assignment or subletting affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several with the assignee(s)), or relieve Tenant of any of its obligations hereunder. In the event that Landlord shall consent to an assignment or subletting under this Section, such assignment or subletting shall not be effective until the assignee or subtenant shall execute, acknowledge, and deliver to Landlord an agreement, in form and substance satisfactory to Landlord, whereby assignee or subtenant shall assume all of the Tenant’s obligations of this Lease and whereby the assignee or subtenant shall agree that the provisions contained in this Lease shall, notwithstanding such assignment or subletting, continue to be binding upon it with respect to all future assignments and sublettings. Such assignment or sublease agreement shall be duly executed and a fully executed original thereof shall be delivered to Landlord, and Landlord may collect Minimum Rent and Additional Rent due hereunder directly from the assignee or subtenant. Collection of Minimum Rent and Additional Rent directly from an assignee or subtenant shall not constitute a consent or a waiver of the necessity of consent to such assignment or subletting, nor shall such collection constitute a recognition of such assignee or subtenant as the Tenant hereunder or a release of Tenant from the performance of all of its obligations hereunder.

12.3 Landlord’s Actions. Tenant shall notify Landlord in writing of Tenant’s intent to assign the Lease or any right or interest hereunder, or to sublease the Premises or any part of the Premises, and of the name of the proposed assignee or subtenant, the nature of the proposed assignee’s or subtenant’s business to be conducted on the Premises, the terms and provisions of the proposed assignment or sublease, and to the extent the proposed assignment or sublease is a part of the sale of Tenant’s business, a full copy of such sales contract), a copy of the proposed assignment or sublease form and such other information as Landlord may reasonably request concerning the proposed assignee or subtenant, including, but not limited to, net worth, income statements and other financial statements for a two-year period preceding Tenant’s request for consent, evidence of insurance, and any other information Landlord may reasonably request. Landlord shall, within 30 days of receipt of such written notice and all additional information requested by Landlord concerning the proposed assignee or subtenant, elect to take one of the following actions: (a) Consent to such proposed assignment or sublease; (b) Refuse to consent to such proposed assignment or sublease; or (c) Landlord may, at its option exercised by 30 days written notice to Tenant, elect to recapture the Premises and as of the 30th day after Landlord so notifies Tenant of its election to recapture, this Lease shall terminate. If Landlord fails to elect any of the alternatives (a), (b), or (c) above within the 30-day period, Landlord shall be deemed to have refused its consent to such assignment or subletting by Tenant.

12.4 Certain Transfers. The sale of all or substantially all of Tenant’s assets (other than bulk sales in the ordinary course of business), or, if Tenant is a corporation, a limited liability company, an unincorporated association, or a partnership, the transfer, assignment or hypothecation of any stock or interest in such corporation, company, association or partnership in the aggregate (cumulative during the Term) in excess of 25% of the total ownership interest in such entity shall be deemed an assignment within the meaning and provisions of this Section.

12.5 Transfer of the Premises by Landlord. Upon any conveyance of the Premises and assignment by Landlord of this Lease, Landlord shall be and is hereby entirely released from all liability under any and all of its covenants and obligations contained in or derived from this Lease accruing after the date of such conveyance and assignment, and Tenant agrees to attorn to any entity purchasing or otherwise acquiring Landlord’s interest in the Premises.

  1. DEFAULT AND REMEDIES.

13.1 Tenant’s Default. At the option of Landlord, a default under this Lease by Tenant shall exist if any of the following events occur (each is called an "Event of Default"): (a) If Tenant fails to pay Minimum Rent or Additional Rent, or any other payment required by this Lease, and such failure continues for 10 days after same is due; (b) Tenant vacates or abandons the Premises; (c) Tenant is dismissed or expelled from the Premises by or under any authority other than Landlord; (d) Tenant files a voluntary petition or institutes any proceedings in bankruptcy or under any insolvency laws seeking to effect a reorganization or a composition with its creditors; (e) any bankruptcy or insolvency proceedings are commenced, a receiver or trustee is appointed for the agents of Tenant; or Tenant’s leasehold estate is taken on execution or by any process of law; (f) Tenant admits in writing its inability to pay its obligations as they become due; (g) Tenant fails to observe or perform any other provision under this Lease and such failure is not cured before 20 days elapse after notice to Tenant; or (h) Tenant attempts to make or suffers to be made any transfer, assignment, or subletting, except as provided in this Agreement. The notices required by this Section shall be in lieu of, and not in addition to, any notice required under the law. The provisions of this Section to the contrary notwithstanding, if Tenant commits a default of its obligations under this Agreement, and if the same default has previously occurred two or more times during the Term (regardless of whether cured), such default shall be conclusively deemed to constitute a non-curable default and give Landlord the immediate right to exercise any or all of its available rights and remedies. The provisions of this Section to the contrary notwithstanding, should Landlord elect to send a written notice of default to Tenant for Tenant’s failure to pay Minimum Rent or Additional Rent when due, Tenant acknowledges that such notice is a courtesy to Tenant and that no written notice of a default is required for a second late rent payment that occurs within six months of Landlord’s issuance of the first notice of default for late payment of such Rent.

13.2 Landlord’s Remedies. Upon the occurrence of an Event of Default, in addition to and without waiving any other rights and remedies available to Landlord in law, equity, or otherwise provided in this Agreement, Landlord may, at its option, cumulatively or in the alternative, exercise the following remedies:

  1. Landlord may terminate Tenant’s right to possession of the Premises, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. No act by Landlord other than giving written notice to Tenant of Landlord’s election to terminate Tenant’s right to possession shall terminate this Lease. Tenant acknowledges that Landlord’s filing of an eviction action shall constitute adequate notice to Tenant of Landlord’s intent to terminate Tenant’s right of possession and to terminate the Lease. Acts of maintenance, efforts to re-let the Premises, or the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease shall not constitute a termination of Tenant’s right to possession. Termination shall terminate Tenant’s right to possession of the Premises but shall not relieve Tenant of any obligation under this Lease that has accrued prior to the date of such termination nor of the obligation for Rent that would have accrued but for such termination.
  1. Upon such termination, Landlord shall have the right to re-enter the Premises, and remove all persons and property, and Landlord shall also be entitled to recover from Tenant: (i) the worth at the time of the award of any unpaid Rental which had been earned at the time of termination; (ii) the worth at the time of the award of the amount by which the unpaid Rental which would have been earned after termination until the time of the award exceeds the amount of the loss of such Rental that Tenant proves could have been reasonably avoided; (iii) the worth at the time of the award of the amount by which the unpaid Rental for the balance of the Term after the time of the award exceeds the amount of the loss of such Rental that Tenant proves could have been reasonably avoided; (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result from Tenant’s default, including, but not limited to, the cost of recovering possession of the Premises, commissions and other expenses of re-letting, including necessary repair, renovation, improvement and alteration of the Premises for a new tenant, the unamortized portion of any Tenant Improvements and brokerage commissions funded by Landlord in connection with this Lease, the cost of rectifying any damage to the Premises occasioned by the act or omission of Tenant, reasonable attorneys’ fees, and any other reasonable costs; and (v) At Landlord’s election, all other amounts in addition to or in lieu of the foregoing as may be permitted by law.[1]
  1. Landlord may elect not to terminate Tenant’s right to possession of the Premises, in which event this Lease will continue in full force and effect as long as Landlord does not terminate Tenant’s right to possession, and Landlord may continue to enforce all of its rights and remedies under this Lease, including the right to collect all Rent as it becomes due. In addition, if Tenant has entered into a sublease which is valid under the terms of this Lease, Landlord may also, at its option, cause Tenant to assign to Landlord the interest of Tenant under the sublease, including, but not limited to, Tenant’s right to the payment of Rent as it becomes due. Landlord may elect to enter the Premises and re-let them, or any part of them, to third parties for Tenant’s account. Tenant shall be liable immediately to Landlord for all costs Landlord incurs in re-letting the Premises, including, but not limited to, brokers’ commissions, expenses of cleaning and remodeling the Premises required by the re-letting, attorneys’ fees and like costs. Re-letting can be for a period shorter or longer than the remaining Term of this Lease and for the entire Premises or any portion thereof. Landlord shall have no obligation to prefer the letting of the Premises over any vacant space in the Resort nor to accept any replacement tenant that would result in the violation of any use restrictions in the Resort, not be desirable for the Resort’s tenant mix, or otherwise not meet Landlord’s leasing criteria. Tenant shall pay to Landlord the Minimum Rent and Additional Rent due under this Lease on the dates the Minimum Rent and such Additional Rent are due, less the rent Landlord actually collects from any re-letting. Except as provided in the preceding sentence, if Landlord re-lets the Premises or any portion thereof, such re-letting shall not relieve Tenant of any obligation hereunder. Notwithstanding the above, no act by Landlord allowed by this Subsection shall terminate this Lease unless Landlord notifies Tenant in writing that Landlord elects to terminate this Lease.

13.3 No Surrender. Tenant waives any right of redemption or relief from forfeiture under any present or future law, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of an Event of Default. No act or thing done by Landlord or Landlord’s Agents during the Term shall be deemed an acceptance of a surrender of the Premises and no agreement to accept a surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlord’s Agents shall have any power to accept the keys to the Premises prior to the termination of this Lease, and the delivery of the keys to any such employee shall not operate as a termination of this Lease or a surrender of the Premises.

13.4 Landlord’s Default. Landlord shall not be deemed to be in default in the performance of any obligation required to be performed by it under this Lease unless and until it has failed to perform such obligation within 30 days after receipt of written notice by Tenant to Landlord (and the Mortgagees who have provided Tenant with notice) specifying the nature of such default; provided, however, that if the nature of Landlord’s obligation is such that more than 30 days are required for its performance, then Landlord shall not be deemed to be in default if it shall commence such performance within such 30 day period and thereafter diligently prosecutes the same to completion.

13.5 Landlord’s Right to Perform. If Tenant shall at any time fail to make any payment or perform any other act on its part to be made or performed under this Lease, Landlord may, but is not obligated to, at Tenant’s expense, and without waiving or releasing Tenant from any obligation of Tenant under this Lease, make such payment or perform such other act to the extent Landlord may deem desirable, and in connection therewith, pay expenses and employ counsel. All sums paid by Landlord and all penalties, interest and costs, including, but not limited to, collection costs and attorneys’ fees reasonably incurred in connection therewith, plus twenty percent (20%) of any such sums for Landlord’s administrative costs shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

13.6 Interest on Late Payments. Should Tenant fail to pay when due any

installment of Minimum Rent, Additional Rent, Percentage Rent or any other sum payable to Landlord under the terms of this Lease within ten (10) days following the due date, then interest at the Applicable Rate, shall accrue from and after the due date until paid, and such interest shall be paid by Tenant to Landlord at the time of payment of the overdue sum.

  1. LANDLORD OBLIGATIONS. In addition to granting Tenant use of the Premises pursuant to the terms of this Agreement, Landlord agrees to provide:
  1. A single phone providing local and long distance calls, but including no other services. Tenant shall pay all applicable fees related to the installation and operation of any additional phone lines it requires, and all charges Landlord incurs with the use of additional phone lines.
  1. A designated parking area (currently referred to as the “boat parking lot”) will be assigned for all off-premise tennis participates. A “Hang Tag must be displayed for this temporary parking privilege. All employees of HHIT must have an “F” series vehicle pass attached to their windshields. There will be no parking at the pro-shop and or between the Tennis Villa buildings due to private ownership of the condos.
  1. Provide employees to operate the Pro-Shop on an annual basis; these employees will be responsible for the care of the fitness center and the merchandising of Hilton Head Island Beach and Tennis logo apparel, also they will collect for all outside tennis play at the Resorts designated tennis court fees that are not affiliated with HHIT’s tennis academy, special events and tournament play.
  1. Maintain the Courts in a playable condition at all times. At a minimum, cracks will be repaired on an annual basis such as is the current practice in preparation for Spring Break Tennis. Tenant agrees to provide Landlord with contacts in the tennis industry for securing for court maintenance and repairs. Tenant will also review maintenance proposals and provide input to the Executive Director regarding repairs and repair proposals and pricing.
  1. Landlord shall post tennis flyers provided by Tenant in each of the Resort buildings, and assist in providing tennis event information to all incoming Resort guests.
  1. Landlord shall pay Tenant a commission of 10% the lodging revenues generated from that particular stay for every lodging reservation for 3 or more consecutive nights that is generated by Tenant’s operations under this Agreement.
  1. MISCELLANEOUS PROVISIONS.

15.1 Rights of Successors and Assigns. The covenants, terms, and conditions contained in this Agreement shall apply to, inure to the benefit, and be binding upon the parties, their heirs, permitted assigns, legal representatives, and other successors in interest, except as otherwise provided in this Lease.

15.2 Waiver. The failure of either party to require strict compliance with the provisions of this Lease shall not constitute a waiver of any rights or otherwise prevent either party from subsequently requiring strict compliance with any provisions hereof. No waiver of any provision of this Lease shall be effective unless it is in writing and signed by the waiving party.

15.3 Whole Agreement. This Agreement constitutes the whole agreement between the parties, and may not be amended unless by a written agreement signed by both parties. No representation, condition, term, or provision not contained in this Agreement shall be binding upon either party. When appropriate, words of any gender shall mean and include the other genders, and singular shall mean and include the other plural, and vice versa. This Agreement contains, merges, and integrates the entire agreement and understanding between the parties to this Lease, and there are no oral or written agreements, promises, or understandings between the parties other than those expressly stated in this Lease. Any and all prior contracts, negotiations, agreements, promises, statements, and understandings between the parties are considered superseded, withdrawn, and cancelled unless expressly stated otherwise in this Lease. In signing this Lease, the parties have not relied on, and have not been influenced by, any oral or written information, facts, statements, representations or anything else that has been said or supplied to them by or on behalf of a party that is not expressly stated in this Lease.

15.4 Attorneys’ Fees. If any action at law or in equity shall be brought to recover any Rent under this Lease, on account of any breach, or to enforce or interpret any of the covenants, terms, or conditions of this Agreement, or for the recovery of the possession of the Premises, or otherwise in connection with this Agreement the prevailing party shall be entitled to recover from the other party as part of the prevailing party’s cost, reasonable attorneys’ fees, the amount of which shall be fixed by the court and shall be made a part of any judgment rendered.

15.5 Captions. The captions and headings used in this Agreement are for the purpose of convenience only and shall not be construed to limit or extend the meaning of any part of this Agreement.

15.6 Time. Time if of the essence for the performance of each term, condition, and covenant of this Agreement.

15.7 Unavoidable Delay. The parties shall not be chargeable with, liable for, or responsible to the other for anything or in any amount for any unavoidable delay, and any unavoidable delay shall not be deemed a breach of or default in the performance of this Agreement, it being specifically agreed that any time limit provision herein, at Landlord’s option, shall be extended for the same period of time lost by unavoidable delay; provided, however, in no event shall any unavoidable delay excuse or delay Tenant’s obligation to timely pay Rent under this Agreement.

15.8 Exclusive Agreement. Tenant agrees to enter into this exclusive agreement with Landlord and no other outside Entities, Resorts, or Plantations are to be included in any co-operative advertising or partnerships.

15.9 Governing Law. This Agreement shall be governed exclusively under the provisions hereof and by the laws of the State of South Carolina. Landlord and Tenant hereby (a) submit to personal jurisdiction Beaufort County, South Carolina, the courts thereof and the United States District Courts sitting therein, for the enforcement of this Agreement; (b) waive any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the Beaufort County, South Carolina for the purpose of litigation to enforce this Agreement; and (c) agree that service of process may be made upon it in the manner prescribed in the “Notices” section (Section 11)of this Agreement.

15.10 Operational Control and Cooperation. Tenant shall control the detailed manner and methods of its operations so long as such methods comply with the provisions of this Agreement. Landlord and Tenant will be required to work together in certain circumstances, and the parties agree to use their best efforts to work efficiently and respectfully with each other. Tenant shall work with the Executive Director of the Resort in planning and creating additional activities and shall use best efforts in implementing said activities, within the established rules of the Resort[W3]. The parties agree to meet on a periodic basis to evaluate progress and discuss issues that may arise from time to time. Tenant further agrees to consult and work with the CVC, Executive Director, and Owners’ Recreation Committee[W4] on a periodic basis.

15.11 Compliance with Labor Laws. Tenant agrees to comply with the Fair Labor Standards Act of 1938, as amended, the Occupational Safety and Health Act, and all other applicable laws, orders, rules and regulations. Tenant further agrees to immediately advise Landlord and its Executive Director in writing of any condition or event that renders Tenant in non-compliance with any of the aforementioned Codes, which are notspecific obligations of this Agreement. Tenant shall take immediate action to mitigate any damages that may arise from its non-compliance of these laws and regulations.

IN WITNESS WHEREOF, the parties have caused these presents to be executed the day and year first above written.

Landlord

Tenant

HHB&T Convention Center, Inc.

Hilton Head Island Tennis

Clint Van Aswegen , Principal

Luther W. Wright, Jr.,

Executive Director

Richard Eric Wammock, Principal

HHB&T Convention Center, Inc.

Commercial Lease Agreement

Page 1 of 20

[*] Dates beyond December 31, 2010 reflect the optional renewal term.

[1] As used in subparagraphs 13.2(i) and 13.2(ii), the “worth at the time of the award” is computed by allowing interest at the Applicable Rate. As used in subparagraph 13.2(iii), the "worth at the time of the award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank for the District in which the Center is located at the time of the award plus one percent.

[W1]Is this 10% sales price?

[W2]Are courts rented? The term “villa” arguably excludes Admiral’s Row.

[W3]This is not a specific activity and should not be a subparagraph here.

[W4]Needs to be more specific. Need to set times and give powers and rights. Agreements to agree are illusory and unenforceable.

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